Estate Planning

Silversmith Legal offers a wide range of estate planning services for individuals and families, including the preparation of wills, trusts, and business succession planning documents. Our focus is to assist our clients’ overall goals in providing for their families at death and to minimize gift and estate taxes. At Silversmith Legal, we also provide planning for clients during their lifetime, such as in the event of incapacity through the preparation of advance directives and medical and financial powers of attorney.

Additionally, we can assist our clients with the care of their minor children through the designation of guardians.

Who Needs An Estate Plan?

There is no specific net worth requirement that a client must have before triggering the need to have an estate plan. If you are a living person, have any assets in your name, and wish for those assets go to particular people or charitable organizations when you pass away (or go to those individuals or organizations during your lifetime in the form of a gift), then you are a candidate for an estate plan.

What Type of Estate Plan Do I Need?

In 2018, a married couple may have up to a combined $22.36 million dollars of assets (less the value of any gifts made during lifetime that reduced an individual’s lifetime exemption) before they will be subject to having to pay any U.S. federal estate tax upon death. A single person (other than a widow who has inherited their deceased spouse’s unused exemption) may pass away with up to $11.18 million dollars of assets before their estate would have to pay any U.S. federal estate tax. According to various authorities, given the inflation-adjusted federal estate and gift tax exemptions, less than 0.2% of estates will owe any federal estate tax.

Essentially, the number of individuals and married couples who need to do sophisticated estate tax planning are the minority on the extreme side of the spectrum. This does not mean that there is no need for married couples or individuals to have estate planning documents.

The best approach is a holistic estate plan that considers all factors that affect you and your family.

At Silversmith Legal, we take pride in guiding our clients through the estate planning process, which includes thoroughly educating clients about each document before they sign. Additionally, if you happen to already have estate planning documents, we can review those documents to ensure that they accurately reflect your current wishes. If you have any questions about the creation of a new estate plan or the review of an existing estate plan, please let us know and we will be happy to assist you.

Wills

The most common estate planning document that people think of or talk about is a Will.  Wills serve as a legal declaration of one’s wishes with regard to how they would like their property distributed upon their death.  In your Will, you need to appoint a Personal Representative/Executor for your estate.  The Personal Representative is responsible for handling the administration of your estate, which includes, among other things: probating your estate (if necessary), filing your final income tax return, notifying and paying creditors that you may have upon passing, and making sure that any probated assets ultimately go to the named beneficiaries in your Will (or in the case of an estate plan that includes a Revocable Trust, the Trustee of your Trust for distribution to your Trust beneficiaries).

While having a Will is important so that you can appoint a Personal Representative of your estate, it may not necessarily be the only document that is needed to have a complete estate plan (see Revocable Trusts below).

Revocable Trusts

Revocable Trusts, sometimes referred to as Living Trusts, have many benefits when properly incorporated as part of your estate plan.  To debunk a common myth, trusts are not just for the wealthy or “trust funders.”  In addition to tax planning, Revocable Trusts can be used to create a structure of asset protection for your beneficiaries after you pass away, as well as set the stage for estate administration ease due to probate avoidance for any assets that are owned by a Revocable Trust at your death—these assets can include, among other things, real estate and financial accounts.

In your Revocable Trust, you need to appoint a Trustee.  The Trustee is typically responsible for managing and distributing any assets held in trust for your benefit (during your lifetime), and for your beneficiaries (after your death).  The creator of the Revocable Trust (often referred to as the Settlor or Grantor of the Trust) is typically the initial Trustee during his or her lifetime, while not incapacitated.  The Settlor of the Revocable Trust can specify a list of successor Trustees during his or her lifetime (if the Settlor is unable to serve as Trustee), and a list of successors after the Settlor’s passing—the appointed Trustee can be either an individual or a corporate Trustee.

During the Settlor’s lifetime, as long as he or she has the mental capacity to do so, the provisions of a Revocable Trust can be amended or modified as many times as the Settlor would like, such as situations where the Settlor changes his or her mind about the beneficiaries of the Revocable Trust or the amounts to be distributed to a particular beneficiary.

Irrevocable Trusts

Irrevocable Trusts are an important planning tool, but due to the finality associated with using this type of document, individuals must carefully weigh the benefits of forever giving away an asset versus maintaining control over the asset for the rest of the individual’s life.  There are many sophisticated tax planning opportunities available when considering the implementation of an Irrevocable Trust; however, given the complexities associated with this type of planning, an in-person meeting is suggested to discuss all of the tax planning nuances.  Two common Irrevocable Trust structures include Life Insurance Trusts and Gift Trusts—please continue to read below for additional information on these types of trusts.

Life Insurance Trusts and Planning

Most people do not realize when they are sold a life insurance policy that the proceeds of the policy are included in the individual’s gross estate when they pass away—assuming the policy is owned by the individual whose life is insured.  Simply put, there are planning opportunities available to avoid this potential Federal Estate Tax pitfall when life insurance proceeds, which are Income Tax free to the beneficiary, are subject to Federal Estate Taxes upon the death of the insured.  Properly establishing and funding an Irrevocable Life Insurance Trust (sometimes referred to as an “ILIT”), is a way to remove the life insurance death benefit from an individual’s estate and potentially saving hundreds of thousands of dollars of unnecessary tax.

Having previously worked at a top tier accounting firm in South Florida with a wealth advisory wing, Chris Silversmith understands how financial products, including life insurance, function as part of an individual’s estate plan.  If you have a life insurance policy or a Life Insurance Trust that has not been reviewed in years, it could be beneficial to take a look at it to determine if the Life Insurance Trust and/or the life insurance policy still meet your needs.

Gift Trusts

Gift Trusts are a type of Irrevocable Trust that individuals will use to forever remove assets from their estate, and therefore, any appreciation on the value of the properly gifted assets will not be included in the estate of the donor upon their passing.  Gift Trust planning, while there are many alternatives, can be useful in circumstances where the future appreciation of a particular asset may be significant.

Financial Power of Attorney

As part of most estate plans, individuals execute a Financial Power of Attorney. In a Financial Power of Attorney, the creator (referred to as the Principal) needs to appoint an Agent. The Agent is there to step into your shoes and handle financial/business matters on your behalf in the event that you are unable to act for yourself—this can include times of incapacity. The Financial Power of Attorney document becomes invalid at death, but may be modified or revoked at any time during the Principal’s lifetime.

Medical Power of Attorney

Similar to Financial Powers of Attorney, many individuals execute a Medical Power of Attorney (sometimes referred to as a Designation of Healthcare Surrogate) as part of their estate plans. In a Medical Power of Attorney, the creator (referred to as the Principal) needs to appoint an Agent. The Agent in your Medical Power of Attorney is responsible for making medical decisions on your behalf in the event that you are unable to do so on your own. The Medical Power of Attorney document becomes invalid at death, but may be modified or revoked at any time during the Principal’s lifetime.

Living Will

Another document that people consider including as part of their estate plans is a Living Will. In a Living Will, you state your wishes as to how you would like to be treated in the event that you have a terminal condition, or are in a persistent vegetative state. The choices in your Living Will include, among other things, if you would like to be maintained on life support or receive artificial nutrition and hydration when you are terminal or in a vegetative state. You do not appoint anyone to serve as an agent in this document, as the document itself is what controls your wishes.

Asset Protection

Asset protection planning is for anyone seeking to protect their assets from potential creditors—it is not just for the super-wealthy.

Anyone can get sued. Lawsuits can stem from car accidents, credit card debt, bank foreclosures, or unhappy customers, among many other things. If someone wins a monetary judgment against you, the financial ramifications could drastically affect you and your family. To help keep your assets away from creditors, you should consider moving them somewhere that creditors may have a more difficult time reaching them. Asset protection techniques include maximizing contributions to IRAs, moving funds to an irrevocable trust, retitling various assets, and using limited liability companies or family limited partnerships.

It is important to note that asset protection planning should be done as a preventative measure, before you are sued. Under the law, you may not defraud current creditors. If a lawsuit has already been filed against you, or if you know you are going to be sued, and you transfer assets so that creditors can’t reach them, a court may reverse the transfer. Because of this, it is a good idea to put a plan into place now before it’s too late.

At Silversmith Legal, we can work with you to develop an asset protection plan that addresses your short and long-term financial goals.